MINNEAPOLIS - The week after First Bank System Inc. agreed to sell 63 of its small-town branches, participants in what is believed to be the first large-scale consortium-based purchase of private branches say they are pleased with the results.
The branches, with total deposits of $961.5 million, were among the 211 outlets that First Bank obtained as part of its recent acquisition of Metropolitan Financial Corp. They were sold to 28 community banks in eight Midwestern states. In a statement, the $34 billion-asset holding company said it sold the branches "after carefully evaluating all Metropolitan locations in terms of their potential to increase their individual market shares and operate within FBS profitability standards." The branches sold include 17 in Minnesota, 11 in North Dakota, 10 in Iowa, nine in Nebraska, seven in Kansas, five in Wisconsin, and two each in Arizona and South Dakota. The sales agreements were reached through several consortiums, which pooled the resources and buying power of dozens of small banks together. Although consortium-based purchases of failed thrifts from the Resolution Trust Corp. have occurred in the past, Eric Hovde, executive vice president of Hovde Financial said this is the first such private purchase. Mr. Hovde, whose Washington, D.C.-based company organized the purchase of 27 branches in Arizona, Iowa, Nebraska, and Wisconsin, called it a good deal for all sides. The small banks were able to make acquisitions that they probably would not have made on their own, while First Bank gained the ease and cost-savings of not having to hammer out 63 separate purchase agreements.